Report: CA economic outlook grim, but actual performance not so bad

money budgetCalifornia again sits near the bottom of a state-by-state comparison of economic competitiveness, but its economic performance has been more middle-of-the-road, according to an annual study by the right-leaning American Legislative Exchange Council.

Judging by 15 policy measures, all of which are influenced by the state legislature, ALEC analysts determined that California ranked 46th in terms of its economic outlook.

The 15 measures include: top marginal personal income tax rate (13.30 percent, ranks 50), top marginal corporate tax rate (8.84 percent, ranks 40), sales tax burden ($24.24 per $1,000 of personal income, ranks 30).

Other measures, which are considered negative by the report but others might argue are good things, are the state’s relatively high minimum wage of $10 per hour (the legislature just approved a gradual increase to $15 per hour) and California not being a right-to-work state.

“This is certainly some pretty troubling findings for most hard-working California taxpayers,” said Jonathan Williams, vice president for the Center for State Fiscal Reform at the American Legislative Exchange Council.

“We chose those 15 (measures) because they’re things that legislators control and are also things that we know, based on academic research, things that lead to greater amounts of economic growth if you get them right,” Williams continued.

It wasn’t all negative, though. The state ranked high — 6th overall — for having one of the lowest rates of public employees as part of the workforce (nearly 452 public employees per 10,000 of the population).

Since 2009, California’s economic outlook peaked at 38. In 2016, the state ranks 46th, down two spots from last year. The only states with lower rankings are: Connecticut, New Jersey, Vermont and New York. Utah has topped the list since 2009.

Economic Performance

While the report casts a grim projection, actual performance has been much higher. California ranks 31 in economic performance, which measures gross domestic product, absolute domestic migration and non-farm payroll employment.

Between 2004 and 2014, California has seen GDP rise 40.3 percent (cumulatively), ranking 22. GDP is the monetary value of all the finished goods and services produced in the state over a period of time.

Non-farm payroll employment has cumulatively grown 6.8 percent over the same 10-year period, ranking 19th.

Absolute domestic migration

Williams said economic performance had a high domestic migration rate not pulled it down. California has seen a cumulative loss of more than 1.2 million people between 2005 and 2014, ranking 49th. This measures excludes births, deaths and foreign immigration.

Texas has seen a cumulative gain of more than 1.3 million Americans over that time, while Florida has overall taken in around 835,000 new, American residents. They rank first and second, respectively.

“Americans continue to vote with their feet in favor of states with better economic opportunity,” Williams said. “It is clear California has been on the losing end of this competition for jobs and human capital.”

6 comments

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  1. Richard Rider
    Richard Rider 21 April, 2016, 06:17

    While we are the 10th worst state for corporate income taxes, the more important stat is that we are THE worst west of Iowa (except for oil dependent Alaska). Its these Western states that are our economic competitors for businesses.

    Moreover, CA tries to tax the corporate earnings of a business that does ANY business in California. And seeks to tax corporate earnings in other states (unlike almost all other states’ tax policies).

    A CA business is deemed by Sacramento to be an ATM machine for politicians and attorneys. Aside from retail businesses, all others should flee the Golden State.

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  2. Richard Rider
    Richard Rider 21 April, 2016, 06:23

    I’m not sure how the study came up with the 30th ranking for CA sales tax. The Tax Foundation places our tax RATE (including local sales tax and considering what is taxed) at 40th (10 states worse).
    http://taxfoundation.org/article/state-and-local-sales-tax-rates-2016

    I suspect the reason is that the ALEC study uses the PER CAPITA figures. In CA people spend so much on HOUSING (rent, mortgage, taxes, etc.) that they have little money left to spend on goods subject to the sales tax.

    FINALLY — an advantage to being “house poor”!! 😉

    Reply this comment
  3. bob
    bob 21 April, 2016, 10:56

    OK, so Colliefornia has the highest poverty rate in the nation, but with Democrats running everything what could possibly go wrong?

    Maybe we could get a franchise from Morris Dees and open the Colliefornia Poverty Law Center. There’s a lot of money to be made off poverty, just ask Morris. And if you disagree with anything I say you must belong to a hate group!

    Reply this comment
  4. SkippingDog
    SkippingDog 21 April, 2016, 18:55

    ALEC is a far right organization, not merely “right leaning.” It’s conclusions are as valid as similar claims by the John Birch Society.

    Reply this comment
  5. Ulysses Uhaul
    Ulysses Uhaul 21 April, 2016, 20:09

    Groups like Ragwus and John Birch Society and Illuminati etc etc are CWD topics by unbalanced types…so sad…they live in mom’s basement posting in their skivvies!

    Reply this comment
  6. Redness teddy
    Redness teddy 28 April, 2016, 07:23

    I’m pretty certain that ol dick rider is also a ski vies poster too??

    Reply this comment

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